Chapter I: How Florida Law Works in Respect to Business Damages in Eminent Domain

A. Overview

1. Origin of Business Damages in Eminent Domain

In public law, Eminent Domain is the right or power to take private property for public purpose. Government is allowed to appropriate or take private property when the ‘Taking’ serves a public purpose. Factors considered to support a public purpose include highway construction, mitigation, drainage, etc. Upon exercising this governmental right known as “eminent Domain,” a condemning authority is required, by the Florida Constitution, to provide “full compensation” to the property owner for the loss of property.

In 1933, Florida passed a State Statute allowing businesses to seek compensation for business damages caused by Eminent Domain proceedings. The statute placed certain restrictions on the circumstances and nature of the compensation to be sought.

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Chapter II: How does the Eminent Domain Process Get Started?

A. Who are the players in this game and how should they interrelate with each other?

1. Legislature

Eminent Domain is “…predicated upon a proposition that the private property sought is foe a necessary public use.” (Baycol, Inc. vs. Downtown Development Authority of the City of Fort Lauderdale, 315 So.2d. 451,455 (Florida, 1975). Roadway construction, water storage, required drainage and airport runway expansion are examples of a public purpose for which governmental bodies may invoke eminent domain authority and take private property.

The Florida Legislature allows for business damage compensation in eminent domain proceedings and can revise or repeal this provision.

(a) Laws, Court Cases and Other Guidelines

Florida State Statute Section 73.071(3)(b) establishes the law relating to business damages and sets forth the guideline criteria to make a claim. Florida courts interpret the statute, which results in court rulings that are subject to various interpretations.

2. Judges and the Courts

The court determines the jurisdiction over the parties and whether the condemning authority is properly using its delegated authority.

3. The Role of Juries

The role of a jury is to review the case based on the evidence presented and the set the amount of damages. A jury is a body of people who are chosen to decide the truth of factual evidence in an action or legal proceeding, and after instruction by the court, apply the law to the facts.

4. Department of Transportation

At the time a state department improvement project is identified, a site plan, engineering and construction plan, including right-of way maps, are prepared. State Department of Transportation representatives or agents compile data relative to the type of takings required, parcel ownership and other information that will be critical in evaluating the business damages. Therefore, this information should be presented to the business damage expert as soon as possible.

5. Right-of-Way Agents

Right-of-way agents are usually the first to identify parcels and businesses that could be affected by the 'taking’. Early in the process, the right-of-way agents have the most exposure to the business owner, as they are responsible for discussing acquisition issues and seeking a settlement with the business owners.

6. Relocation Agents

Relocation Agents may provide early evidence of business eligibility verification during the preparation of the “A-Plan” (Conceptual Stage-PD&E stage) by preparing a summary of business and tenant information on each parcel. It can then be compared to the “B-Plan” (Relocation Needs Assessment Survey), provided the same business and tenant information is made available to other Department sections and consulting business damage experts.

7. Property Management Agents

Business damages do not begin until actual denial of the use of the property is taken (Weese v. Pinellas County, 6878 So.2d (Fla. 2nd DCA 2996). It is not unusual for business owners to be granted extended possession at the Order of Taking, either by agreement or by order of the Court.

8. Attorneys

The attorneys for both the condemner and the condemnee are the major players in the resolution of the amount of damages. The condemner attorneys may be from the Department of Transportation or from the Attorney General’s Office. Their role in preparing the State’s position regarding the case includes motions of discovery, researching legal precedents and establishing legal instructions all of which impact the calculation of business damages.

9. Experts

An expert is defined as one who possesses special knowledge not held by the ordinary layperson. The definition applies exclusively to a person regularly engaged in the practice of a profession, holds a specialized degree from an institution of higher education and has professional training or certification, experience and special knowledge or skill concerning the subject matter. It is important to understand the role of the experts and how each may impact the appraisal of the resulting business damages.

(a) Appraisers:

  (1) The Real Estate Appraiser

  (2) The Fixtures & Equipment Appraiser

(b) Engineering/Land Planners

(c) Certified Public Accountants and Other Business Damage Experts

(d) Parking Study Experts

(e) Marketing Professionals

(f) Other Technical Specialties

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Chapter III: Factors that May Result in Damages

A. What are the Sources of Damages?

Business has been defined to mean the activity, energy, capacity and opportunity by which results are reached. The measure of damages to a business is a matter of a subjective analysis that will vary with the facts of each case. The denial of the use of the part taken may create damages as a result of a loss of customers, impairment of business operations, and the increase in the costs of doing business such as: additional personnel or additional equipment to maintain sales volume, elimination or curtailment of certain business functions or profit centers, and loss in value of certain trade fixtures and equipment no longer useable on the remainder. In addition, there may be a loss of parking, impairment of access or maneuverability on site, and loss of display area caused by the ‘taking’. In accordance with Matthews v. Division of Administration, State Department of Florida, Department of Transportation, 324 So. 2d 664 (Fla. 4th DCA 1975), business damages are not restricted to the loss of profits.

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Chapter IV: How can we Mitigate Potential Damages?

A. Mitigation

1. Should The Business Owner Consider Mitigation?

Generally, the business owner should consider ways to mitigate his damages and, therefore, it may be necessary to consider a relocation of the business, when evaluating the business damages.

For examples, a physician, who has his office taken for right-of-way, should not claim that he must be paid business damages on the basis of a complete wipeout of his medical practice. In that case, the physician should consider moving his practice. It is that mitigation that brings in the entire area of moving and relocation in the calculation of business damages.

A business that does not depend on an impulse buyer, but rather a destination bound buyer, may not have damages associated with its customers going a short, extra distance and could be a candidate for relocation. A move by a business dependent on impulse buyers could lose its customer base at a different location and might not be able to move.

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Chapter V: Calculations of Business Damages

A. General Guidelines

In 1999, new legislation made changes regarding the communication between the condemning authority, the business owner, and the production of the business records.

The notice and offer provisions of the legislation are effective January1, 2000 but after July 1, 2000, before an eminent domain proceeding is brought, the condemning authority must make a good-faith effort to notify the business owners, including lessees, who operate a business located on the property to be taken.

The condemning authority must notify the business owner of the following:

1. That all or a portion of his or her property is necessary for a project.

2. The nature of the project for which the parcel is considered necessary, and the parcel designation of the property to be acquired.

3. That within 15 business days after receipt of a request by the business owner, the condemning authority will provide a copy of the appraisal report upon which the offer to the fee owner is based, copies, (to the extent prepared) of the right-of-way maps or other documents that depict the proposed taking, and the copies, (to the extent prepared) of the construction plans that depict project improvements to be constructed on the property taken, and improvements to be constructed adjacent to the remaining property, including, but not limited to, plan, profile, cross-section, drainage, pavement marking sheets, and driveway connection detail. The condemning authority shall provide any additional plan sheets within 15 days of request.

4. The business owner’s statutory rights to business damages, attorney fees and reasonable costs under Section 73.015, 73.071, 73.091 and 73.092 F.S.

5. The business owner’s notice rights and responsibilities to make and offer and receive certain prelitigation costs.